2 ms·

Fraud has always been criminal. Stiglitz wants to take a new category of behavior and elevate it to the level of a serious crime. And think about this: "They

Fraud has always been criminal. Stiglitz wants to take a new category of behavior and elevate it to the level of a serious crime. And think about this: "They were optimizing not on producing mortgages that were good for the American families but in maximizing fees." I can think of a lot of incentives that might be put in place to help align the interests of those writing the mortgages and those who are receiving the mortgages, however, jail time would not be on my list. We can have a rich and interesting conversation about what incentives might be effective. We can have a rich and interesting conversation about what incentives set up skewed motives that lead to anti-social behavior. But jail time should never come into the conversation. Killing off innovation in the USA could be easy, just introduce jail time into a conversation about what incentives might motivate the business community to be socially responsible.

slantyyz 16y ago
what incentives might motivate the business community to be socially responsible. I don't disagree with the spirit of what you're saying, but people and businesses are naturally inclined to game whatever rules and regulations are in place if it means maximizing revenue. While jail time may not be the answer, I do think a stick might be more effective than a carrot.
- lkrubner 16y ago
  I am curious how far you want to go with the idea that a stick is more effective than a carrot. Do you feel that economies where the bulk of economic activity is organized via free actors engage in voluntary exchange tend to be more dynamic than economies where the government plays the major role in organizing economic activity? If not, on what basis would you justify allowing the existence of non-governmental economic activity?
  - slantyyz 16y ago
    I carefully used the word "might" because this is clearly a complex issue, and I'm no economist. As someone who would otherwise be classified as "pro-business", I have found myself more and more dismayed by the bad behaviour of the largest corporations and their influence on the government. A corporation is a legal entity with rights equal to a human, but in an Animal Farm kind of way. Their influence over governments and lawmaking make them "more equal" than Joe Q. Public. I would like to see checks and balance to keep the most flagrant corporate/financial bad behaviour under control.
    - lkrubner 16y ago
      " I have found myself more and more dismayed by the bad behaviour of the largest corporations and their influence on the government." Me too. That's not the issue. The issue is why anyone would suggest jail. There is a large range of actions that could be pursued to modify the incentives that lead people to make reckless gambles with credit. Why not pursue those other actions first? Why not change the financial incentives? Why resort to jail?
      - slantyyz 16y ago
        I didn't suggest jail. I only suggested a stick. That stick could be in the form of fines or other financial sanctions.
        lkrubner 16y ago
        Yes, that's what I said. There are many, many changes that could be made to the system that would change the incentives that motivate the people in the financial industry, and by changing the incentives we could expect that their behavior would alter. None of which requires jail. Larger fines should be enough to greatly change the incentives.
        lkrubner 16y ago
        I wasn't suggesting that you suggested jail. This thread is about an article in which Stiglitz suggests jail.
lotusleaf1987 16y ago
Where does he say he wants to make a new category of behavior to punish? I don't see that anywhere in the article. However, I do see this: "We fine them, and what is the big lesson?" said Stiglitz. "Behave badly, and the government might take 5% or 10% of what you got in your ill-gotten gains, but you're still sitting home pretty with your several hundred million dollars that you have left over after paying fines that look very large by ordinary standards, but look small compared to the amount that you've been able to cash in." Taken together, Stigliz said, this system of widespread fraud, lax regulation and non-deterrent enforcement, created a system of skewed incentives that rewarded criminality, gambling and other bad behavior, and left American workers, investors and homeowners holding the bill. So please, why do you think jail time should be off the table for a white collar criminal who destroys the wealth of millions and of shareholders, but that jail time for say someone who steals a car is fine? That makes no rational sense. One is obviously more harmful, although a little less tangible than say stealing a car or a diamond, but it's still real value/wealth that they are effectively destroying/stealing. You're acting like there is more innovation when there is less regulation, but that obviously isn't the case otherwise companies would be fleeing America for Africa. >Killing off innovation in the USA could be easy, just introduce jail time into a conversation about what incentives might motivate the business community to be socially responsible. This makes no sense, if they commit a crime, they should go to jail, end of story. We don't need to legalize crime to incentivize innovation.

slantyyz 16y ago

what incentives might motivate the business community to be socially responsible. I don't disagree with the spirit of what you're saying, but people and businesses are naturally inclined to game whatever rules and regulations are in place if it means maximizing revenue. While jail time may not be the answer, I do think a stick might be more effective than a carrot.

lkrubner 16y ago
I am curious how far you want to go with the idea that a stick is more effective than a carrot. Do you feel that economies where the bulk of economic activity is organized via free actors engage in voluntary exchange tend to be more dynamic than economies where the government plays the major role in organizing economic activity? If not, on what basis would you justify allowing the existence of non-governmental economic activity?
- slantyyz 16y ago
  I carefully used the word "might" because this is clearly a complex issue, and I'm no economist. As someone who would otherwise be classified as "pro-business", I have found myself more and more dismayed by the bad behaviour of the largest corporations and their influence on the government. A corporation is a legal entity with rights equal to a human, but in an Animal Farm kind of way. Their influence over governments and lawmaking make them "more equal" than Joe Q. Public. I would like to see checks and balance to keep the most flagrant corporate/financial bad behaviour under control.
  - lkrubner 16y ago
    " I have found myself more and more dismayed by the bad behaviour of the largest corporations and their influence on the government." Me too. That's not the issue. The issue is why anyone would suggest jail. There is a large range of actions that could be pursued to modify the incentives that lead people to make reckless gambles with credit. Why not pursue those other actions first? Why not change the financial incentives? Why resort to jail?
    - slantyyz 16y ago
      I didn't suggest jail. I only suggested a stick. That stick could be in the form of fines or other financial sanctions.
      - lkrubner 16y ago
        Yes, that's what I said. There are many, many changes that could be made to the system that would change the incentives that motivate the people in the financial industry, and by changing the incentives we could expect that their behavior would alter. None of which requires jail. Larger fines should be enough to greatly change the incentives.
      - lkrubner 16y ago
        I wasn't suggesting that you suggested jail. This thread is about an article in which Stiglitz suggests jail.

lotusleaf1987 16y ago

Where does he say he wants to make a new category of behavior to punish? I don't see that anywhere in the article. However, I do see this: "We fine them, and what is the big lesson?" said Stiglitz. "Behave badly, and the government might take 5% or 10% of what you got in your ill-gotten gains, but you're still sitting home pretty with your several hundred million dollars that you have left over after paying fines that look very large by ordinary standards, but look small compared to the amount that you've been able to cash in." Taken together, Stigliz said, this system of widespread fraud, lax regulation and non-deterrent enforcement, created a system of skewed incentives that rewarded criminality, gambling and other bad behavior, and left American workers, investors and homeowners holding the bill. So please, why do you think jail time should be off the table for a white collar criminal who destroys the wealth of millions and of shareholders, but that jail time for say someone who steals a car is fine? That makes no rational sense. One is obviously more harmful, although a little less tangible than say stealing a car or a diamond, but it's still real value/wealth that they are effectively destroying/stealing. You're acting like there is more innovation when there is less regulation, but that obviously isn't the case otherwise companies would be fleeing America for Africa. >Killing off innovation in the USA could be easy, just introduce jail time into a conversation about what incentives might motivate the business community to be socially responsible. This makes no sense, if they commit a crime, they should go to jail, end of story. We don't need to legalize crime to incentivize innovation.